Category: Rhode Island
Rhode Island Military Filing Information
Under the provisions of the Soldiers and Sailors Civil Relief Act, the service pay of members of the armed forces can only be subject to income tax by the state of which they are legal residents. Place of legal residence at the time of entry into the service is normally presumed to be the legal state of residence and remains so until legal residence in another state is established and service records are changed accordingly. The Rhode Island income tax is imposed on all the federal taxable income of a resident who is a member of the armed forces, regardless of where such income is received.
Armed Services personnel serving in a designated combat zone are eligible for certain federal tax considerations, including an exclusion for active duty combat zone pay and extensions of time to file and pay. The issue that arises, of course, is whether the same treatment is accorded with respect to state income taxes. Rhode Island conforms to both the exclusion and the filing deadline extension..
Military pay received by a nonresident service person stationed in Rhode Island is not subject to Rhode Island income tax. This does not apply to other income derived from Rhode Island sources, e.g., if the service person holds a separate job, not connected with his or her military service, income received from that job is subject to Rhode Island income tax.
Military Spouses Residency Relief Act
In addition, under the provisions of the Military Spouses Residency Relief Act, income for services performed by the servicemember’s spouse can only be subject to income tax by the state of his/her legal residency if the servicemember’s spouse meets certain conditions.
Income for services performed by the servicemember’s spouse in Rhode Island would be exempt from Rhode Island income tax if the servicemember’s spouse moved to Rhode Island solely to be with the servicemember complying with military orders sending the servicemember to Rhode Island. The servicemember and the servicemember’s spouse must also share the same non-Rhode Island domicile.
However, other income derived from Rhode Island sources such as business income, ownership or disposition of any interest in real or tangible personal property and gambling winnings are still subject to Rhode Island income tax.
Internal Revenue Code provisions governing armed forces pay while serving in a "combat zone" or in an area under conditions that qualify for Hostile Fire Pay are applicable for Rhode Island purposes.